Though the US Federal Reserve’s first interest-rate hike of 2023 is smaller than those that preceded it, policymakers have signaled that more increases are on the way, despite slowing price growth. But there is good reason to doubt the utility – and fear the consequences – of continued rate hikes, on both sides of the Atlantic.
It all began a year ago with the French “No” in the referendum on the European Constitution. It continued last fall with the wave of violence in the suburbs. Now, France has again brought itself to the world’s attention with weeks of street demonstrations against the “contract of first employment” (CFE) proposed by Prime Minister Dominique de Villepin to address high youth unemployment.
These three sets of events, different as they are, together illustrate several deep-seated characteristics of social life in France.
First, France has found it difficult to adjust to the demands of globalization. Beyond ordinary dissatisfaction with economic problems, the failed referendum in May 2005 expressed the rejection by an important part of the French electorate of the discipline imposed by EU policies ensuring free movement of people, goods, and capital – and thus of the primacy of economic competition. In a similar vein, last fall’s explosion of violence in the suburbs reflected the frustrations of disoriented young people facing the grim prospects that a modern economy offers to those who lack proper training and education.
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